Recent examples of partnership with International Financial Institutions

The CDF suggests a long-term holistic approach to development that recognizes the importance of macroeconomic fundamentals but gives equal weight to the institutional, structural and social underpinnings of a robust market economy. It emphasizes strong partnerships among governments, donors, civil society, the private sector and other development actors. The CDF’s guiding principle is that the country is in the driver's seat, both ‘owning’ and directing the developing agenda, with the Bank and the country's other partners each defining their support in their respective business plans.

The CDF is defined as a process: it is not a blueprint to be applied to all countries in a uniform manner. Rather, it is considered an instrument for achieving greater development effectiveness in a world challenged by poverty and distress. In the short run, the CDF establishes mechanisms to bring people together and build consensus, forges partnerships that allow for strategic selectivity, and emphasizes the achievement of results, thus contributing towards the goal of poverty reduction and reaching agreed targets such as the International Development Goals.

The World Bank is currently piloting the CDF approach in 13 countries (Bolivia, Côte d'Ivoire, Dominican Republic, Ethiopia, Eritrea, Ghana, Jordan, Kyrgyz Republic, Morocco, Romania, Uganda, Vietnam and West Bank and Gaza).

Formulated in terms of the prerequisites for sustainable growth and poverty alleviation, the framework sets out four categories of prerequisite: institutional, human, physical and country-specific strategies. The vertical axis of the matrix lists the four traditional partners in development: government, multilateral/bilateral institutions, civil society and the private sector. The World Bank has decided to test the scheme in the same pilot countries to explore the possibility of both promoting national consensus on a development strategy and coordinating development partnerships.

The United Nations Secretary-General has expressed support for the CDF, and UNDP has addressed a letter to all resident coordinators requesting them to collaborate with the World Bank in this exercise. Contacts within the UN system have been intensified recently at all levels to strengthen UN World Bank collaboration. In order to jointly monitor and track progress in the 12 pilot countries, UNDG and the World Bank have established a joint UN system–World Bank Learning Group on the CDF. IFAD is actively participating in the work of this Learning Group, and the first meeting took place in September 1999. A second meeting took place in spring of 2000. More specifically, United Nations instruments such as the UNDAF and the CCA provide a basis for closer collaboration both with the World Bank and with other key partners.

HIPC and Poverty Reduction Strategy Papers

Building on the principles of the CDF approach and closely related to debt-relief efforts under the Debt Initiative for Heavily Indebted Poor Countries (HIPC DI), the World Bank and International Monetary Fund (IMF) introduced a new approach to poverty reduction at the September 1999 meeting of the Development Committee. This approach aims at enhancing the poverty-reduction focus and impact of development activities of national governments, the World Bank, IMF and other donors through developing a more comprehensive understanding of poverty and its determinants, this in turn should lead to higher-impact public actions, combined with more rigorous monitoring.

In practice, the new approach will lead to the development of national poverty-reduction strategy papers (PRSPs), which are to be country-driven and developed transparently with the broad participation of elected institutions, stakeholders including civil society, key donors and regional development banks. These should also have clear ties agreed international development goals.

Poverty Reduction Strategy Papers (PRSP) are prepared by the member country in collaboration with the staffs of the World Bank and the IMF as well as civil society and development partners. Updated annually, they describe the country's plan for macroeconomic, structural, and social policies for three-year economic adjustment programs to foster growth and reduce poverty, as well as associated external financing needs and major sources of financing. Interim PRSPs (I-PRSPs) summarize the current knowledge and analysis of a country's poverty situation, describe the existing poverty reduction strategy, and lay out the process for producing a fully developed PRSP in a participatory fashion.

Initially, the focus will be on countries eligible for debt relief under the HIPC DI and that are approaching their decision point (endorsement of the PRSP by the World Bank and IMF Executive Boards is a prerequisite for HIPC DI eligibility). Ultimately it is expected that by the end of 2001, all active International Development Agency and Poverty-Reduction Growth Facility (PRGF – former ESAF) countries (more than 60) should have initiated the PRSP process, and many should by then have a PRSP in place.

While the Development and Interim Committees of the World Bank and IMF endorsed the enhanced HIPC DI framework at their annual meetings in September 1999, the joint statement highlighted the need to implement the HIPC DI in accordance with the following original principles:

additionality of debt relief;
maintaining the financial integrity of IFIs; and
cost-sharing on a broad and equitable basis.

The communiqué also stressed that the financing of debt relief should not compromise funding provided through concessional windows.

While IFIs may be invited to examine the feasibility of allocating internal resources to the initiative, it was recognized that there will need to be additional bilateral support in order to meet the financing requirements of the enhanced initiative.

In 1999, donors and international financial institutions committed themselves to strengthen the HIPC debt initiative by providing faster, deeper, and broader debt relief with a commitment by the World Bank and the IMF to permit at least 20 countries to benefit from debt relief by the end of 2000. As a result, after they reach their completion point and receive the full assistance under the enhanced HIPC Initiative, these countries will see their foreign debt reduced by almost half on average. Combined with existing debt relief programs-such as those of the Paris Club of creditor nations-these countries will see their debts fall, on average, by about two-thirds. These efforts are expected to lift some USD 34 billion in debt service obligations from the shoulders of 22 eligible countries, 18 of them in Africa.

World Bank/International Monetary Fund (IMF)

Working with agencies with which IFAD shares common objectives has become pivotal to the Fund’s effort to deliver its development agenda and secure adequate resources for its programmes. This actively-pursued strategy builds on the comparative advantage of partners with whom the Fund shares a common set of objectives. One such example is the Bretton Woods institutions, with whom IFAD has had a long and fruitful history of collaboration.

In addition to establishing biannual consultations among IFAD’s President and the heads of the World Bank and IMF on programmes and joint operations, over the years IFAD has developed a strong partnership with these institutions. This has involved, for example, World Bank cofinancing and supervision of IFAD projects and collaboration in programmes such as the Regional Unit for Technical Assistance in Central America, the Popular Coalition to Eradicate Hunger and Poverty and microcredit intermediation. IFAD also participated in World Bank round-table consultations with other multilateral financing institutions. These round-table discussions focused on the shared objectives of the participating institutions and presented a series of initiatives based on the theme partnership for development. The consultation resulted in the launching, of the World Bank’s Comprehensive Development Framework (CDF) in early 1999.

Comprehensive Development Framework (CDF)

The CDF suggests a long-term holistic approach to development. While it recognizes the importance of macroeconomic fundamentals, it also gives equal weight to the institutional, structural and social underpinnings of a robust market economy, emphasizing partnerships among governments, donors, civil society, the private sector and other development actors. The World Bank is currently piloting the CDF approach in 11 countries and the West Bank and Gaza. In order to jointly monitor and track the progress in these countries, the UN and the World Bank have established a joint UN system/World Bank Learning Group on the CDF. IFAD is actively participating in the work of this learning group. A first meeting took place in September 1999, and a second took place in spring of 2000. UN instruments, such as the United Nations Development Assistance Framework (UNDAF) and the CCA, provide a strong basis for closer collaboration,

Debt Initiative for Heavily Indebted Poor Countries (HIPC DI) and Poverty-Reduction Strategy Papers (PRSPs)

Building on those initiatives of the Cologne G-8 Summit related to debt-relief efforts under the HIPC DI, the World Bank and IMF developed a new approach to poverty reduction. Introduced during the September 1999 meeting of the development committee, the approach aims to enhance the poverty-reduction focus and impact of development activities of national governments. It will lead, in practice, to the development of national poverty-reduction strategy papers (PRSPs), which are to be country-driven and developed with the broad participation of elected institutions and stakeholders (including civil society, key donors and regional development banks). They will also have clear links to agreed international development goals.

Initially, the focus will be on countries that are eligible for debt relief under the HIPC debt initiative and are approaching their decision point. By the end of 2001, it is expected that all active IDA and Poverty-Reduction Growth Facility (PRGF) — the former IMF Enhanced Structural Adjustment Facility (ESAF) — countries (60 plus) will have initiated the PRSP process. By that time, in fact, many should have an operational PRSP. However, the endorsement of the enhanced HIPC DI framework highlighted the need to imple-ment the HIPC DI in accordance with the following original principles:

additionality of debt relief;
maintenance of the financial integrity of the IFIs; and
cost-sharing on a broad and equitable basis.

IFAD’s a href="/governance/ifad/eb.htm">Executive Board endorsed the principle of IFAD’s engagement in the HIPC DI as early as 1996. In February 1997, the Governing Council approved the framework for IFAD participation in the HIPC DI with Resolution 101/XX. At its December 1997 session, the Executive Board approved the operational policy framework for IFAD’s contribution to the HIPC DI and, with Resolution 105/XX1, the February 1998 meeting of the Governing Council established an IFAD HIPC Trust Fund.

Preliminary estimates for the Fund’s participation in the enhanced HIPC DI indicate a total cost of USD 260 million (in 1998 net-present-value NPV terms, using a 6% discount rate), which will amount to a total of USD 336 million in nominal terms. To date, the Executive Board has approved debt-relief packages for seven countries: Bolivia, Burkina Faso, Côte d’Ivoire, Guyana, Mali, Mozambique and Uganda. The Fund is so far committed to providing a total of USD 24.5 million in relief. Bolivia, Guyana, Mozambique and Uganda have reached their completion point, and IFAD has started to provide those countries with front-loaded debt-service relief. However, this debt relief will be implemented over a period of several years, in line with the loan amortization schedules of the countries’ loans. In addition, preliminary documents prepared by World Bank/IMF for Nicaragua and the United Republic of Tanzania are being reviewed within IFAD. While IFIs may be invited to examine the feasibility of allocating internal resources to the initiative, it was recognized that "there will need to be additional bilateral support in order to meet the financing requirements of the enhanced Initiative".

IFAD and the World Bank

IFAD has a long and fruitful history of collaboration with the World Bank. This has involved Bank cofinancing and supervision of IFAD projects and collaboration in programmes such as the Regional Unit for Technical Assistance in Central America and the Popular Coalition to Eradicate Hunger and Poverty. Moreover, as a member of the Facilitation Committee (FC), the World Bank actively supports the Global Mechanism of the United Nations Convention to Combat Desertification (UNCCD), hosted by IFAD. FC has proved to be a valuable instrument in support of the Global Mechanism, providing a forum for advice and discussion on all aspects of its mandate and operations. In November 1999, IFAD hosted the sixth meeting of the FC of the Global Mechanism and took an active part in the deliberations of the Third Conference of the Parties of the UNCCD held in Recife, Brazil.

Currently, discussions are under way to arrange a joint mission to desertification projects in Africa for the Presidents of the World Bank and IFAD. In West Africa, IFAD and the Bank have already established a framework for increased collaboration, focusing on rural development strategies in eight countriessup>1. IFAD operates in all countries or regions suggested as pilots for the partnership-for-development programme. However, as the Fund has no field representation, its involvement in such partnership initiatives also depends on sufficient notice being given to IFAD’s country portfolio managers regarding meetings at the country level.

African Development Bank (AfDB)

The long-standing partnership with the AfDB was strengthened with the visit of the AfDB President to IFAD in October 2000. The visit was an opportunity for a tour d’horizon on bilateral relations and a review of areas of mutual interest (collaboration in programmes as well as cofinancing and supervision of IFAD projects).

Similarly, IFAD senior management visited the AfDB in Abidjan, Côte d’Ivoire, and was represented at the international conference on "Good Governance and Sustainable Development in Africa", held in November 1999 in Abidjan. The conference was opened by the head of state of Côte d’Ivoire and was attended by several senior officials from Africa and about 300 African practitioners and experts, scholars, private-sector representatives, political and opinion leaders, representatives of trade organizations, civil-society representatives and bilateral and multilateral lenders. The conference served as a platform to establish an independent body, the African Observatory on Governance, which sets the following:

developing an implementation programme of action;
assessing the state of governance in countries from the five regions of Africa;
publishing, regular reports on the state of governance in Africa;
providing guidance to African states on model regulations and moral codes on governance; and
assembling experts to provide technical assistance.

AfDB cofinancing figures

Cooperation with the Islamic Development Bank (IsDB)

In May 1979, IFAD and the Islamic Development Bank signed a Cooperation Agreement in order to achieve their objectives in assisting countries of common memberships in their developmental activities. As such the agreement involves:

regular consultation on matters of mutual interest;
exchange of information on potential projects related to their common objectives and provision of suggestions for participation in such projects;
reciprocal representation to the organisations’ governing bodies;
close cooperation in the identification, preparation and appraisal of development projects likely to be suitable for financial assistance from both organisations;
exchange of information on specific development projects in countries of common membership for which financing from both organisations appears necessary or suitable,

IFAD and IsDB have continued to expand their cooperation since the signature of the Agreement. Cooperation has benefited Member States in Africa, Asia, the Near East and North Africa, and more recently in the Commonwelath of Independent States (CIS). Regular meetings have taken place between representatives of the two institutions at the highest level, both in Rome and Jeddah to discuss, inter alia, ways and means of strengthening collaboration, particularly through increased cofinancing of projects in sub-Saharan Africa and the newly independent countries in eastern Europe, central Asia, and the Caucasus.

A potential collaborative effort has been identified as part of the North Somalia Integrated Rural Development Programme, which is currently under appraisal for financing through, the Belgian Survival Fund among others, at a total cost of USD 5.5 million.

ISDB cofinancing figures

OPEC Fund

Partnership between IFAD and the Organization of the Petroleum Exporting Countries (OPEC) Fund has been further developed with more frequent visits and exchanges between the two institutions. During 2001, the Director General of the OPEC Fund visited IFAD to review bilateral relations and discuss ways of strengthening partnerships between the two institutions. In September 2001, IFAD was invited to address a seminar at OPEC Fund headquarters in Vienna. Other working visits have taken place for the purpose of identifying joint financing opportunities for the two institutions.

1/ Implementation has started in Ghana and Guinea and will cover six additional countries: Burkina Faso, Chad, The Gambia, Mali, Nigeria and Senegal.

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